An increase in aggregate demand due to higher foreign income will cause:
a. domestic equilibrium GDP to increase.
b. domestic equilibrium GDP to decrease.
c. domestic prices to fall.
d. foreign prices to fall.
e. foreign equilibrium GDP to fall.
a
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For this question, assume that the economy is operating in a fixed exchange rate regime and that perfect capital mobility exists. Given this information, which of the following will occur?
A) The domestic and foreign interest rates must be equal. B) The central bank cannot use monetary policy to affect domestic output. C) An expansionary fiscal policy will require that the central bank increase the money supply. D) all of the above E) none of the above
If U.S. consumers increase their spending on electric cars by 100 percent, and 100 percent more electric cars are produced, this is known as the
A) majority rule. B) proportional rule. C) government rule. D) profit rule.